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.... only truely affordable housing!Unfortunately I think our (un)trustworthy Cons really haven't got a clue what they're doing when it comes to housing. Shock horror, I realise, but when they say about building 300k homes a year, I don't see any mention of what % of those will be truely affordable?
Yes, they've got their BTR mates in their back pocket building lovely shiny boxes for the increasingly-hunted 'young professionals' but what about the average Joe with his minimum wage job?
A quick Rightmove search on 3 large cities (London, Birmingham, Manchester) for all types of property showed the following:
London + 40 miles: Sale = 151,249 (240,200 inc. Under Offer, Sold STC)Rent = 78,526 (107,664 inc. let agreed)
Birmingham + 40 miles: Sale = 53,364 (95,926 inc. Under Offer, Sold STC)Rent = 22,161 (30,662 inc. let agreed)
Manchester + 40 miles: Sale = 79,858 (133,518 inc. Under Offer, Sold STC)Rent = 31,402 (41,061 inc. let agreed).416k+ homes currently available to rent or buy (including duplicates of course) is not a housing shortage in 3 major cities?The percentage of affordable homes from the above available would be an interesting figure!Now I realise Rightmove is probably not the best place to find truely affordable housing to buy or rent, but I don't know of any place to find those figures?
My conclusion is that there's plenty of property out there to buy or to rent, but ever increasingly the % that is affordable is probably on the decline.
Cons, it's over to you to sort out if you can fit it in to your busy schedule!
Ian Mulheirn was saying that a couple of years ago - https://email@example.com/how-to-...e5ba5d3c38
As for how many are affordable lets assume an average wage of £24k and that paying 30% of that in rent is "affordable", i.e. a rent of £600pm. Also restrict the search to 2 bed properties.
London (+40) - 27k to let but just 26 for £600pm or less
Birmingham - 6k to let ,1,800 for £600pm
Manchester - 10k to let - 5,279 for £600pm
So London has more available, but very few affordable ones, where Manchester does not have much of a problem.
I can understand why governments focus on new builds - It worked in the past, first when there was plenty of land freed up by bombing and later by slum clearances. But building where land is availablewon't solve London's problem., One Oddity about London is that though it has the highest population density of any UK city and the UK has a higher population density than France and the USA, but Paris and New York have higher population densities than London.
Inhabitants per square mile
New York 27k
It appears that London needs more high density housing, maybe replacing a lot of the 3 or 4 story vistorian terraces with 5 or 6 story apartment blocks.. But getting from where it is now to there would be very difficult politically . . Building tower blocks would be even more problematical, except when they are "luxury" ones.
Overall across UK the average occupancy rate is just 2.4 persons per home - with millions of cheapish homes esp in Midlands/North etc.
The 10 million extra homes added over past 50 odd yrs lowered av occupancy by around 30% - though around 1/3rd of homes today have a sole occupant - so the other 2/3rds have the same av occupancy as 50 yrs ago ie around 3.2 persons.
Following deindustrialisation of Midlands/North etc over past half century - many of those homes are now effectively in the wrong place - given that the SE hosts around 40% of whole UK pop - and Greater London's 600 sq miles hosts more than the combined pop of Scotland/Wales.
As for affordability - ONS say that when London wages are stripped out of UK total - average individual wage for the rest of UK is just £17550 pa gross - hence why almost half of all the 37% in social/private rentals are claiming HB/LHA. DWP say only 23% of hose claimants are in working households - many being retired/carers/sick /disabled etc.
"416k+ homes currently available to rent or buy (including duplicates of course) is not a housing shortage in 3 major cities?"
Maybe i am missing something but not sure how this is a sign that there is no shortage.
You can have 12 people dying of thirst and have enough water for 10 in bottles. Regardless of how many times those 10 bottles of water are traded (ones assumes to the highest possible level) you still have a shortage and two people will miss out.
Think its the same case here. Yes there are houses being traded but if you are earning the average London wage, the fact that overseas investors are swapping £20m assets in Chelsea is hardly relevant to your situation.
How many properties do you think there should be available for there not to be a shortage then?
I do not think the two are linked.
For example i do not think there is a shortage in the NE as supply and demand are balanced so that someone on the average wage can afford a house. P/E ratio of under 5.
In London there is a shortage as despite the numbers you have listed being for sale in your first post as the prices have been bid up to levels far beyond what the average wage can afford. P/E ratio is 14.5 last time i looked.
But are the properties you mention outside of the SE actually affordable without housing benefit etc. ?
London obvs has an issue for FTBs - but yr 14.5 PE overlooks that FTBs typically buy at around 60% of average local price.
CML data across Greater London shows average FTB has £60k income and borrows 3.8 xS - with a 30%/£100k deposit. So the av FTB pays £328k hence PE is then 5.47
Overlay that with DCLG flagging that 75% of FTBs are couples - potentially with 2 full time incomes.
CML national data shows av FTB has £38k household income and borrows 3.11 xS with a 17%/£24k deposit - hence the £142k purchase price is then PE of 3.74.
Again most may well have 2 incomes and assuming a 40 hr week for both that average £19000 individual income is just over 10% uplift on adult min wage.
I think what you are saying is supporting my view of a shortage.
"London obvs has an issue for FTBs - but yr 14.5 PE overlooks that FTBs typically buy at around 60% of average local price."
I think your statement overlooks that FTB will not be earning their full wage potential when they buy. 14.5x for someone in their late 20s early 30s is probably about right - being they are earning 60% of their potential wage (in 40s/50s) and purchasing a flat for 60% of the average price.
"CML data across Greater London shows average FTB has £60k income and borrows 3.8 xS - with a 30%/£100k deposit. So the av FTB pays £328k hence PE is then 5.47"
This shows that there is a large shortage of housing. The prices have been bid up to the point where your average FTB has a wage in excess of the average wage for greater london AND has to have a £100k deposit. That is not your average person and means a large % of people - i.e nurses, teachers, frankly anyone earning close to the average wage without significant family support for the £100k is excluded.
Your PE value is derived from the position of people who can afford to enter the market. It is not a typical person as you have listed above.
Given that DCLG say 75% of FTBs are couples - the average London FTB income of £60k across 2 workers is about average for London workers. Wages across Greater London are
Inner London £34400
Outer London £24400
Those working for lower wages in Outer London can buy in the cheaper Home Counties.
Wage growth in 21st C is very interesting - though not in a good way - as since the 1970s peak nominal wage growth has about halved in each later decade viz
1970s 17% cagr - doubling in 4 yrs
1980s 9% cagr - doubling in 8 yrs
1990s 5% cagr - doubling in 15 yrs
2000 on 2.5% cagr - doubling in 28 yrs
One of the biggest - if not THE biggest issue for today's property buyers is that future wage growth seems likely to be pretty flat for the majority of workers - so a mortgage will be a burden for far longer than past buyers.
A while back I did some calcs looking at lifetime cost of an 85% 25 yr Repayment mortgage to buy a Home Counties semi at 3 intervals - for an average paid single worker (adjusted for all relevant parameters) viz
1970 cost 8% of net lifetime income
1990 cost 24% of net lifetime income
2015 cost 40% of net lifetime income
Apart from rising PE ratio - slowing wage growth was very major factor.
I ignored the modern trend for most FTBs to be couples - as well as cap on salary multiple for mortgage as the 2015 buyer especially would of course need income of over £100k to get a loan around £425k - in addition to say a £75k deposit.
Housing shortage is another interesting element - seems to imply that more new builds would lower prices - which is entirely logical of course.
In practice however over past 50 odd yrs UK added 2/3rds to original housing stock (extra 10 million homes) and despite lowering average occupancy rate by 30% - prices continued to rise. Since WW2 prices about doubled every 7 to 10 yrs allowing for a few hiccups along the way when prices fell in real terms. My example of a Home Counties semi would have gone from £5000 in 1970 to £500k plus today - even more in London.
To make self contained housing affordable in London/Home Counties for young adults would probably need a massive program of state built high rise tower blocks - eg in excess of a million apartments (in a short time frame) to create a glut and lower prices. Private developers will not build in such numbers quickly as they need prices maintained to generate a profit.
Only other major alternative is to disperse the population/jobs far more evenly around the UK as we had 50/60 yrs ago. To some degree the poorest are already being banished from London/SE via capped/frozen LHA as well as lowered OBC.
I get what you are saying but ultimately i think the argument of FTB are now X where X is so divergent from what the average person in their late 20s, early 30s is merely evidence of a shortage of housing.
For example, yes the average FTB in Chelsea is on a six figure salary, married with a family deposit of £300k but thats hardly relevant.
If what we are saying is to buy a property which is 60% of the median value - i.e a cheaper FTB flat, you need to be married, both be earning the average city wage (not everyone hits that in their late 20s, early 30s) and have a casual £100k deposit hanging around thats a huge percentage of the working population excluded. That prices have been bid up that high suggests there is a shortage.
Get your point re developers - a large % of that is the cost of land. If you opened up the frankly not so nice 'greenbelt' land around london that cost would drop.
There are a cohort of workers who wont be able to afford, but they still go out at 8am etc to work has hospital porters etc. and i am glad that they do. I think the govnt should rethink its social housing policy for people such as this.